Engen and Petronas: Strengthening the Relationship?

Rob Angel, CEO of Engen, was concerned about the future of his company. By early 1998, the fall-out of the Asian crisis had affected world markets, including the JSE. A low stock price and global industry conglomeration increased the possibility of a hostile take-over, and the end of much of what Angel had accomplished. In June 1998, Petronas formally offered to buy out all the shareholders of Engen Petroleum Ltd. Angel needed to have a clear recommendation ready for the Engen board meeting planned to discuss the Petronas offer. The Petronas offer reflected a good strategic fit, but the price was low, and there was some concern about the operational integration of the two companies. If he were to recommend rejection of the Petronas offer, what other options should he pursue?

Case is relevant to the following topics: International business strategy, international alliances, mergers and acquisitions, the South African and the international oil industry, implications of share pricing in a buy-out situation, the importance of operational and cultural fit in alliances, mergers and acquisitions.